Given the challenge of finding workable business models here, it’s difficult right now to justify this logic; some winning strategies for stand-alone businesses may emerge in digital health, but is a pharma company especially likely to discover and develop them? For the moment, most pharmas – correctly, I’d say – agree the answer is “no.”

(2) Follow with interest: Determine that digital health, while promising, is still in its earliest days. Just as some pharmas may be relieved they resisted investing in the first round of stem cell technologies, for instance, they might be similarly inclined to adopt a watchful waiting posture, and give the field some time to settle out. Functional areas could utilize specific digital health solutions when they evolve to the point they are available from vendors, similar to the way other solutions are utilized by the industry.

While this fundamentally conservative approach avoids risky investment, it arguably comes with a significant opportunity cost (a key lesson of the 2012 Presidential campaign): a missed chance to take advantage of technologies already available and to gain expertise in navigating this important, emerging space.

Nevertheless, most pharmas seem content to remain here for now, though they might resource several small, exploratory/pilot efforts just to test the waters.

(3) Elevate: Set up a dedicated “digital health” division envisioned not as a standalone business unit, but tightly integrated and explicitly intended to support the main pharma business, similar to the way many companies have dedicated “biomarker” divisions, for example. This group could be responsible for monitoring external developments and internalizing and operationalizing the most promising technologies.

The main advantage of this approach is that it might help an otherwise traditional and somewhat hide-bound corporation better understand the emerging opportunities, and aggressively move up the adoption curve.

The key concern I’d have is that at the end of the day, I’m not sure it makes sense to view “digital health” as its own discipline, but rather as a diverse group of technologies that ultimately will be used (in the context of pharma) to help deliver solutions to already existing functional areas, from basic research (to the extent this still occurs in pharma) to biostatistics to clinical development to marketing.

(4) Planned obsolescence: My personal choice, this approach would set up a dedicated “digital health” group, as in (3), but with the stated mission of catalyzing technology adoption, and with the explicit expectation that it would wind down within a set time (say five years). If successful, awareness of the relevant digital health opportunities and expertise in their appropriate utilization would by that point be located in the individual functional areas.

What I like most about this approach is that it recognizes digital health offers enabling technologies that provide improved approaches to solving fundamental problems that exist in many, if not all, functional areas.

One important pragmatic concern here is that a division with an expiration date may face political challenges within a large and fiercely competitive organization, and may struggle to gain adequate traction; functional areas might feel they can pick up what they need to on their own, and don’t require the additional “help,” potentially marginalizing the nascent digital health group.

On the other hand, precisely because of its limited mission, a digital health group might be less threatening to other functions, and more likely to be embraced – provided it clearly adds value, rather than just creating extra work (unfortunately but not always inaccurately, the way many biomarker groups, for example, are now perceived by the rest of the organization).

Bottom line: I am tremendously excited by the potential synergies between digital health and medical product development; capturing this value, however, will require a sophisticated understanding — not only of the technologies, but also of the specific functional needs and tacit local politics of the organization that hopes to deploy them.

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Option 5 – Spin up (or consolidate) a “real world evidence” (RWE) group that sits in informatics, epidemiology, HEOR, maybe even payer evidence, to analyse things from the perspective not of the *source* of the information, but the nature of the data it produces. This could include analysis of insurance claims, EHR data, registries at the more traditional end, with the same team analysing “digital health” data at the more experimental end. The benefit of this approach is now you have staff familiar with “big data” analytics and visualisation who can quickly compare between data sources to identify the types of questions that each data source can and can’t answer, and worst-case scenario if digital health data turns out not to be useful you’ve still got a team who can look at RWE and diffuse it across the organisation as needed to be more reactive to new trends.

Share enthusiasm for both real world data (key mission of CATCH [ http://catch-health.org/ ], the MGH/MIT digital health initiative we’re putting together, is precisely to use improved real-world phenotypic assessment to improve care and drive science; see: http://www.forbes.com/sites/davidshaywitz/2011/10/23/improved-measurement-a-path-to-better-health-for-real-people/ ). I also appreciate potential of big data ( http://www.theatlantic.com/health/archive/2012/07/a-database-of-all-medical-knowledge-why-not/260313/ ) and have specifically suggested that ability to do sophisticated analytics could represent a competitive advantage for forward-thinking pharmas ( http://www.forbes.com/sites/davidshaywitz/2012/07/27/time-for-biopharma-to-jump-on-the-big-data-train/ ). I also have highlighted more generally the importance and need for better capturing the voice of the patient: http://www.forbes.com/sites/davidshaywitz/2012/02/07/getting-better-online-communities-elevate-voice-of-the-patient/ .

Yes, but also need to add “the other half” : it can be a platform to have a to have a dialog with patients and consumers. The interactive tools and data can provide completely new insights to the product marketing and planning groups of pharma. I think companies need to have internal groups whose job is to understand patient’s journey, and to provide tools that support their decision making.

Thanks for this great post, David. It is, as always, thoughtful, practical, and imaginative. IMHO Pharma needs to be in the space (didn’t people say this years ago with social media?). The economics and regulatory issues hitting healthcare includes the Pharma industry. One model you did not mention was one I think is the best which is the partnering with mobile health tech companies. I have described why Pharma needs mobile and further uses for mobile health tech for Pharma: http://davidleescher.com/2012/06/05/five-reasons-why-pharma-needs-mobile-apps/ http://davidleescher.com/2012/03/28/mhealth-and-pharma-opportunities-for-patients-and-industry/

I would agree with David about partnering with mobile health tech companies. Creating new services is very difficult and it takes a culture that pharma companies generally have very little of: fail fast, learn fast. Developing new “beyond the pill” applications needs to be done with the people using the services right from the beginning, but large corporate policies are not agile enough to implement strategies without thorough planning behind. This will be slow, too slow. Better to buy apps from someone who has already developed them.

#4 is the most tempting but I’ve seen a similar thing happen with newspaper companies. First the digital media team was the “ghetto” weirdos that were ignored. Second they became the “it” kids and started generating real traffic and modest revenues. This led to jealousy by the established cash cow businesses and since they were bringing the lion’s share of the revenue they had political clout to take over the “hot” digital division. With very few exceptions, they screwed it up and the internal disruptive innovators bailed out.

That (and other) experience led me to prefer the Xboxification model I wrote about earlier – http://www.forbes.com/sites/davechase/2012/12/04/xboxification-of-healthcare/. That is, leverage the resources of the mothership but give them freedom to win as endemic players in that arena. It’s one of the things Microsoft has gotten most right in the last 15 years.

IBM’s wholesale pivot is one of the few examples of where a big company could get out of its own way as a major transition happens. Most new groups need to be unshackled from the established businesses but with the opportunity to tap them (with support from sr mgmt).

I suspect, probably a hybrid model of what you and commenters suggest will emerge. I don’t see (1) Opportunistic Adjacency emerging any time soon because digital is not a therapeutic. The true digital/therapeutic synergies will be exploited by startups that *might probably, eventually* merge with bigger organizations.

(2) Follow with Interest is interesting because it is essential. Yet it’s a wait and see approach that will suit big pharma fine. An exception here is new digital platforms for marketing and sales (as mentioned by @veronika). When it comes to clinical development, CROs will continue leading the way with digital tools to accelerate recruitment, expand trials globally, and improve reporting, etc.

(3) Elevate would be a very smart way to pursue digital health but I doubt many have the stomach for this. This will be the strategy pursued by smart mid-sized companies that understand the opportunity.

There are so many opportunities emerging with digital health that pharma will continue having a hard time figuring out how best to leverage. I suspect startups will lead the way.